Minimum Wage Increased to $15 Per Hour for Federal Contractors

December 3, 2021

Publication| Labor & Employment

On November 22, 2021, the U.S. Department of Labor issued a Final Rule that increases the minimum wage for employees who work on federal contracts to $15 per hour, implementing an executive order that President Biden executed on April 27, 2021.  This rule will take effect on January 30, 2022.  It applies in all 50 states, the District of Columbia, and certain U.S. territories. 

In addition to raising the minimum wage, the rule continues to index the federal contract minimum wage in future years to inflation, eliminates the tipped minimum wage for federal contract employees by 2024, and ensures a $15 minimum wage for employees with disabilities performing work on or in connection with covered contracts.  The new requirements do not apply to federal contracts entered into prior to January 30, 2022, but a provision mandating the increased minimum wage must be inserted when such contracts are renewed or extended.  The definition of contracts includes subcontracts and overall is very broad, extending, for example, to procurements, service agreements, and lease agreements.

Federal contractors are only required to pay the increased minimum wage to employees who perform work specified in the contract, including employees who provide ancillary services in connection with such work, e.g., those in human resources, accounting, and IT.  Federal contractors are also responsible for making sure that these requirements flow to the subcontractors.

If you have any questions, please contact a Richards, Layton & Finger employment attorney.

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